Priceline.com Inc (PCLN), Kayak Software Corp (KYAK): Online Travel Services Are Becoming More Popular

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The Alternative

As far as investment alternatives, there are really no direct competitors with the size and global footprint of Priceline, but the closest other choice is Expedia Inc (NASDAQ:EXPE).

By market cap, Expedia Inc (NASDAQ:EXPE) is about one-fifth the size of Priceline, and operates the Expedia online travel site, as well as websites Hotels.com and Hotwire. Expedia is projected to grow at around the same rate as Priceline over the next few years, as the number of people who make travel arrangements online is expected to climb.

Shares trade for 23.6 times TTM earnings, just a bit more expensive than Priceline. However, I like Priceline’s balance sheet better (more cash = more power) and Expedia doesn’t have as consistent of a track record of revenue growth. For instance, over the past decade, Expedia’s revenues have grown by a total of 72%, which sounds impressive, but not when compared to the 509% gain in revenues by Priceline during the same time period!

So, What to Do?

I completely agree that online booking of travel services is on an uptrend that should continue for the foreseeable future. Out of the two big online travel service companies, Priceline is my favorite due to its track record and its awesome balance sheet. However, in a sector that is growing as quickly as this one is, it’s hard to go wrong no matter which one you choose.

The article Online Travel Services Are Becoming More Popular; Here’s How to Play It originally appeared on Fool.com and is written by Matthew Frankel.

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